US natgas prices slip on smaller-than-expected gas draw from inventories

NEW YORK: US natural gas futures fell over 5% on Friday, hitting its lowest level in over a week, as a weekly federal report showed a slightly smaller-than-expected storage withdrawal, and as traders booked some profits after prices rose as much as 3% earlier in the session on increasing amounts of gas flowing to liquefied natural gas export plants.

Front-month gas futures for January delivery on the New York Mercantile Exchange settled 20.1 cents lower, or 5.7%, to $3.51 per million British thermal units (mmBtu) as of 2:50 p.m. EST (1945 GMT), hitting its lowest level since Dec. 18.

The contract is down about 6.2% so far this week after prices hit $4.01/mmBtu level on Thursday, its highest since Jan 2023.

“We’ve definitely seen some pullback because of the inventories, we came in -93 billion cubic feet...I think because of the holiday, the market took some profits after the report. The January contract is also probably seeing rollover pressure because January’s going off the board here pretty quickly and we have an expiration coming up on that contract,” said Phil Flynn, an analyst at Price Futures Group.

The US Energy Information Administration (EIA) showed utilities pulled a smaller-than-usual 93 billion cubic feet (bcf) of gas out of storage during the week ended Dec. 20.

That was less than the 98-bcf withdrawal analysts forecast in a Reuters poll and compares with a decrease of 87 bcf during the same week last year and a five-year average draw of 127 bcf for this time of year. Financial firm LSEG estimated 399 heating degree days over the next two weeks, compared with 393 estimated on Thursday. It also forecast average gas demand in the Lower 48, including exports, jumping to 141.5 bcfd next week from 119.1 bcfd this week.

The amount of gas flowing to the eight big US LNG export plants rose to an average of 14.8 bcfd so far in December from 13.6 bcfd in November. US liquefied natural gas (LNG) company Venture Global LNG’s tanker Venture Bayou departed the Plaquemines export plant in Louisiana for Germany, carrying the first LNG cargo produced at the facility, the company said on Thursday.